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IF ANYBODY HAD SAID that we would threaten one of our greatest public policy successes of the past decade–to wit, the painfully achieved federal budget surplus–I would have said, "Not in this century!" But the century is nearly over and they are back, the big spenders and the tax spendthrifts.

Bill Bradley personifies the spenders. His health care program would add $1 trillion to federal expenditures, a sum roughly consuming the entire federal surplus for the next 10 years. Republicans in Congress wanted to fritter the surplus on a tax cut. They were repulsed by a Clinton veto, but now George W. Bush talks of blowing the entire $1 trillion on his tax-cut program.

Thank heavens we don't have to eat either bowl of porridge. Fiscal conservatives have cooked up a Goldilocks bowl that is not too hot, not too cold, but just right. This is to maintain the discipline of explicit spending caps on discretionary spending and to use whatever surplus emerges to reduce the debt government has accumulated over the past two decades.

The benefits of the spending caps, accompanied by modest tax increases initiated by President Bush in 1990 and extended more ambitiously by President Clinton in 1993, are palpable. That is how we got control of the deficit. It was the springboard for recovery. The financial community regained confidence in government, which enabled the Federal Reserve to lower interest rates. Private investment surged from 7 percent of the gross domestic product in the early 1990s to 13 percent today, the highest level in this century. The investment has generated a burst of productivity, which has in turn constrained and contained inflation, despite much higher rates of GDP growth alongside the lowest levels of unemploy- ment in almost 30 years.

What the spenders and tax spendthrifts obscure by their fast talk is that the projected surplus is no more than an estimate. It assumes adherence to spending caps and even further cuts in discretionary spending over the next decade. Can Congress be trusted to maintain a budget surplus without touching the Social Security surplus? One has only to ask. Both House and Senate have shown a marked inability to live within the budget caps. This year, they took the easy way by looking around for the highest revenue estimates, then investing in gimmicks. They took $28 billion out of the budget and called it "emergency spending." They even sought to use some of the projected surplus from the year 2001 to create the illusion of a budget balance. Simultaneously, and here is the hypocrisy of it, they set new records in pork-barrel spending.

Our politicians, of course, are pandering to the dominant wings in their respective parties. Bill Bradley is appealing to the spend-and-tax left wing of the Democratic Party. Not only would his massive health care program exceed the estimated on-budget surplus of $1 trillion over the next decade, but he acknowledges it may even require more taxes–and this for a program that dumps Medicaid and places nursing homes under the less stringent controls of the states.

The people are right. George W. Bush, of course, tries to justify his tax-cut program with Republican rhetoric about giving money back to the people and limiting government. But what is given away now in an election will have to be recovered later either by higher payroll taxes or by deep cuts in Social Security and Medicare benefits. Never mind that he has, in addition, proposed spending increases for defense and other items. Both the spenders and tax spendthrifts would jeopardize our prosperity by forcing the government back to an inflationary borrow-and-spend spiral.

The good news is that fiscal prudence is supported by the American people. Politicians who have in recent years tried to bribe voters with increased spending programs or big tax reductions have been rejected. Voters reckon that the economy is working on all cylinders so that bigger spending or tax cuts would provoke the Federal Reserve into raising interest rates, which would in turn dampen the surge of investment.

The country needs more national savings, not less. The government needs larger budget surpluses to deal with Social Security and reduce our dependence on foreign borrowing. This is no time to change our program.

It ain't broke. Don't fix
it.

JWR contributor Mort Zuckerman is editor-in-chief and publisher of U.S. News and World Report. Send your comments to him by clicking here.

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